A Model Y electric vehicle is pictured during the start of production at Tesla’s ‘Gigafactory’ on March 22, 2022 in Gruenheide, southeast of Berlin. – US electric car pioneer Tesla received the go-ahead for its “gigafactory” in Germany on March 4, 2022, paving the way for production to begin shortly after an approval process riddled with delays and setbacks. (Photo by Patrick Pleul / POOL / AFP) (Photo by PATRICK PLEUL/POOL/AFP via Getty Images)
Patrick Pleul | Afp | Getty Images
of Tesla The report of better-than-expected deliveries this week was bad news for traders betting on a decline in the electric vehicle maker’s stock.
With shares rallying 17% in the two trading days since the second-quarter report, short sellers have lost an estimated $3.5 billion market-wide, according to data from S3 Partners.
It’s been a painful few months for short sellers, as Tesla shares have soared 73% since hitting a low for the year in April. After closing at $246.39 in shortened trading on Wednesday, the stock is just over $2 off its loss for the year.
Short interest in Tesla currently stands at 3.5% of the float, or 97 million shares shorted, with a notional value of $22.4 billion.
Tesla reported second-quarter deliveries on Tuesday of 443,956, beating Wall Street estimates of 439,000. Deliveries fell 4.8% from a year earlier, but the decline was not as steep as the 8.5% year-over-year drop in the first quarter.
While the deliveries report suggested demand for Tesla vehicles remains stronger than expected, it offered limited insight into the company’s performance.
With its auto business mired in declining sales due to an aging lineup and stronger competition than ever, Tesla has for months been incentivizing electric vehicle purchases with discounts, low or no-interest financing options and other perks.
In the second quarter, for example, Tesla cut prices in Germany and Norway and offered zero-interest loan deals in China, even for its entry-level Model 3 sedan and Model Y SUV. In the US, Tesla offered a three-year 2% APR finance deal for buyers of its rear-wheel drive Model 3.
Meanwhile, Tesla’s newest model, the angular steel Cybertruck, has gotten off to a slow start, with quality issues prompting four voluntary recalls in the U.S. in less than a year.
A Tesla Cybertruck sits tall at a Tesla dealership on April 15, 2024 in Austin, Texas.
Brandon Bell | Getty Images
Tesla’s earnings report later this month will provide a clearer picture of the company’s financial health. Analysts expected revenue to fall 2.9 percent to $24.2 billion, according to LSEG, after a 9 percent drop in the first quarter.
“Clearly the financing offers for both Model Y and Model 3 have led to significant volume growth, but as we’ve seen with other significant price cuts and discounts, demand is pulling forward and new demand needs to be generated in Q3 and then, which has proven challenging over the past 18 months,” Guggenheim Partners analyst Ronald Jewsikow wrote in a note to clients on Wednesday. He has a sell rating on the stock.
Tesla CEO Elon Musk, whose net worth has risen by about $15 billion in the past two days, celebrated the blow to short sellers. That included a personal attack on Microsoft co-founder Bill Gates, who has a history of shorting the stock and associating with Musk.
“Once Tesla fully unlocks autonomy and gets Optimus into volume production, anyone who still holds a short position will be wiped out,” Musk wrote in a post on X. “Even Gates.”
Optimus is Tesla’s humanoid robot now in development. Musk has claimed that these robots will one day turn Tesla into a company worth tens of trillions of dollars. Tesla’s market cap is currently under $800 billion.
Meanwhile, Tesla’s challenges in its core automotive business remain.
The company regularly makes improvements to its in-vehicle software and a new upgrade promises to bring YouTube, Amazon Music, and weather and air quality apps to drivers’ infotainment systems. However, Tesla has yet to deliver software that can turn its existing cars into self-driving vehicles.
Furthermore, a recent Axios-Harris poll The company was found to be facing brand degradation at least in part due to Musk’s “antics” and “political rants.” New York Times research out this week he also said that Musk’s “polarizing statements” and “political activism” are alienating some “left-wing consumers.”
Musk called for a “red wave” in the upcoming US election and said he and former President Donald Trump speak often. He also shared, liked and promoted far-right accounts and content on X. EV advocates, by contrast, tend to be politically left-leaning, according to for research from Pew Research and Gallup last year.
I’M WATCHING: Tesla deliveries are “overanalyzed” by investors
